Buying a home in Columbus is exciting, but the earnest money step can raise a lot of questions. How much do you put down? When is it due? What protects you if something goes wrong? You deserve a clear, local guide so you can write a strong offer without risking more than you should. In this article, you’ll learn what earnest money is, typical amounts in Bartholomew County, when and how to pay it, what protects your deposit, and smart steps to keep everything secure. Let’s dive in.
Earnest money basics
Earnest money is a good faith deposit you include with your purchase agreement to show the seller you are serious about buying. It becomes part of your total funds at closing, reducing what you need to bring for your down payment and closing costs.
Sellers view a solid deposit as a sign of commitment, especially when multiple offers come in. The purchase contract will name who holds the funds in escrow. In Columbus, common escrow holders include a title company, the listing or buyer’s brokerage, or an agreed escrow agent. Indiana real estate forms are set up to identify the escrow agent and the exact deposit amount.
Your deposit sits in a trust or escrow account while you complete inspections, financing, title review, and other steps. If the sale closes, your earnest money is credited on your Closing Disclosure. If the contract ends under a contingency, the deposit is usually returned based on the written terms.
How much is typical in Columbus
There is no state mandated amount in Indiana. Your earnest money is negotiable and shaped by price point and current market conditions in Columbus and Bartholomew County. As general guidance:
- Entry level homes: many buyers use 500 to 2,500 dollars as a token deposit.
- Typical mid market homes: 1 to 2 percent of the purchase price is a common guideline in many markets.
- Highly competitive or new construction: deposits can rise to 3 to 5 percent to strengthen an offer.
Here are examples to make it concrete:
- At 150,000 dollars: 1 percent is 1,500 dollars. A simple flat deposit might be 1,000 to 2,500 dollars.
- At 250,000 dollars: 1 to 2 percent equals 2,500 to 5,000 dollars.
- At 400,000 dollars: 1 to 2 percent equals 4,000 to 8,000 dollars. Very competitive situations may push higher.
The right amount balances two goals: looking strong to the seller and protecting your cash if the deal changes. Your buyer’s agent can advise what is common in your price range and neighborhood this season.
When and how you pay
Most local contracts call for earnest money shortly after both parties sign the purchase agreement. Many brokers expect the deposit within 24 to 72 hours of acceptance. The exact deadline should be written into your offer so there is no confusion.
You can deliver funds by personal check, cashier’s check, company check, or wire transfer to the named escrow agent. Always get a written receipt and confirm that the deposit went into the escrow account listed in your contract. Keep copies of checks and confirmations in your transaction file.
Be cautious with wires. Real estate wire fraud is a known risk. Do not rely on email alone for wiring instructions. Call the escrow holder at a verified phone number you already have to confirm instructions before sending funds. If instructions change at the last minute, verify again by phone or in person.
What your contract should say
Your purchase agreement controls what happens to your earnest money. Make sure it clearly states:
- The exact deposit amount.
- Who is holding the funds and their contact information.
- The deadline to deliver the deposit and how it will be delivered.
- The contingency timelines and notice requirements.
- The conditions for releasing the funds to either party.
Indiana REALTORS forms typically include these fields and often outline how disputes will be handled, such as mutual release, mediation, arbitration, or court action. Clear, specific language and dates reduce the chance of misunderstandings.
How it is applied at closing
When your transaction closes, the escrow holder sends your deposit to the closing agent and it appears as a credit on your settlement statement or Closing Disclosure. That credit reduces your total cash due at the table. If the sale terminates under a valid contingency, the deposit is usually returned as the contract directs. Some escrow accounts are interest bearing, but whether interest is paid and to whom depends on the account setup and your agreement with the escrow holder.
Protect your deposit with contingencies
Contingencies protect you and your earnest money when written clearly and followed on time. Common protections include:
- Inspection contingency: Gives you a set period to inspect, request repairs, or cancel.
- Financing contingency: Protects you if your loan cannot be approved within a set timeframe.
- Appraisal contingency: Helps if the property appraises below the contract price.
- Title contingency: Allows cancellation if title defects cannot be resolved.
- Final walk through and repair deadlines: Keeps you covered if agreed repairs are not completed.
Each contingency should include a deadline and instructions for giving notice in writing. Missing a deadline or failing to send proper notice can put your deposit at risk.
If the deal falls through
When a contract ends, your deposit follows the written terms:
- You cancel within a contingency: the deposit is typically returned to you.
- You cancel outside contingencies or breach the contract: the seller may keep the deposit as liquidated damages, depending on the contract, or pursue other remedies.
- The seller cannot perform, such as being unable to provide clear title: you can usually recover your deposit and may have other contractual remedies.
If there is a dispute, escrow holders often wait for a mutual release signed by both parties or a court order before releasing funds. Keep detailed records to help resolve issues quickly.
A smart Columbus buyer checklist
Use this quick checklist to stay organized and protected.
Before you write the offer
- Talk with your agent about current Columbus norms and competitiveness.
- Choose a deposit that supports your offer strategy, such as 1 percent, 2 percent, or a set amount like 1,000 dollars.
- Confirm who will hold the funds and verify they use a licensed trust or escrow account.
In the purchase contract
- Spell out the earnest money amount, the escrow holder’s name and contact, and your delivery deadline.
- Set clear contingency windows for inspection, financing, appraisal, and title.
- Write in how a valid cancellation will trigger a deposit return and within what timeframe.
- Define how notices must be delivered and by when.
Delivery and documentation
- Pay by a traceable method and get a written receipt of deposit.
- Keep copies of checks, wire confirmations, emails, and texts that acknowledge receipt.
Before wiring funds at closing
- Call the title or escrow company using a verified phone number to confirm wiring instructions.
- Be alert to last minute instruction changes and confirm any change by phone or in person.
If a dispute arises
- Ask the escrow holder and the other party for a written explanation.
- Follow the dispute or mediation steps in your contract. Consider consulting an attorney for significant disputes.
Local notes for Bartholomew County
In Columbus and the rest of Bartholomew County, title companies handle closings and escrow based on Indiana policies and company procedures. Earnest money itself is not recorded with the county. After closing, your deed and mortgage are recorded by the Bartholomew County Recorder. Your transaction file retains the deposit details and receipts.
Local customs can shift with the market. That is why it helps to work with a Columbus based agent who follows weekly listing activity and knows what sellers expect in different price ranges and neighborhoods.
Make your offer strong and safe
A thoughtful earnest money plan can help you stand out without taking on unnecessary risk. Choose an amount that fits the property and market, put clear protections in your contract, deliver funds securely, and keep good records. With the right steps, your deposit will support your offer and then roll smoothly into your closing credit.
Have questions about earnest money or want help shaping a competitive offer in Columbus? Reach out to Kelly Sullivan at Unknown Company for step by step guidance tailored to your price range and neighborhood. Get Your Instant Home Valuation.
FAQs
What is earnest money in a Columbus home purchase?
- It is a good faith deposit you include with your offer that is held in escrow and credited to you at closing, or returned if you cancel under valid contingencies.
How much earnest money should Columbus buyers expect to pay?
- Many buyers use 500 to 2,500 dollars for entry level homes and about 1 to 2 percent of price for typical homes, with higher deposits in competitive situations.
When is earnest money due after my offer is accepted?
- Most contracts call for delivery within 24 to 72 hours of acceptance, with the exact deadline written in your purchase agreement.
Who holds my earnest money in Bartholomew County?
- The contract names an escrow holder, often a title company or brokerage, which deposits your funds into a trust or escrow account and provides a receipt.
What protects my earnest money if I need to cancel?
- Clearly written contingencies, such as inspection, financing, appraisal, and title, plus timely written notices, help ensure your deposit is returned under the contract.
How is my earnest money used at closing?
- It appears as a credit on your Closing Disclosure and reduces the amount of cash you need to bring for your down payment and closing costs.
What happens if there is a dispute about my deposit?
- Escrow holders often wait for a mutual release or court order to disburse funds. Follow your contract’s dispute steps and keep detailed records to support your position.
